Why network slicing is the 5G differentiator telcos have been craving

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this article, John Lenns, VP Product Management at Oracle Communications, explores why network slicing could be the differentiator UK telcos are searching for in the 5G arms race.

When it comes to 5G, most UK telcos are still aggressively jostling for pole position. But, with EE the first out of the starting blocks at the end of May – closely followed by Vodafone rolling out its network to seven UK cities a few days later – the marker has well and truly been laid down.

Around five million Brits switch mobile provider each year, so establishing themselves as an efficient and reliable provider of 5G will be critical for telcos looking to both retain existing and attract new customers over the coming years.

Cutting through the noise with network slicing

One way providers can steal a march on competitors is through the emergence of network slicing, a technology that allows telcos to offer differentiated services with tailored connectivity and potentially specific applications for a specific enterprise segment. Service providers need to play more of a central role in smart ecosystems and digital marketplaces to grow revenues and profitability and compete with digital innovators. To that end they should also consider non-traditional business models such as new SaaS and managed service models to reduce costs and share risks/rewards. Network slicing is a key enabler towards this goal.

With 5G unlocking the potential to launch services and products previously unimaginable on 4G, performance and functionality requirements are bound to differ enormously. Network slicing essentially subverts the one-size-fits all approach, providing the opportunity for carriers to tailor connectivity services to the precise requirements of particular applications, users, or devices.

The concept of a dedicated core network is not new, first introduced in 4G as a DECOR feature. 5G, however, bakes network slicing into its core service and extends it to be end to end.

For telcos, the opportunities are limitless. Want to stream virtual reality at a sports event, or 3D video at a music concert? Before 5G, these experiences were tantalisingly out of reach, limited to stadiums and arenas with only the strongest WiFi connection. But network slicing will make them a mainstay of how people experience brands and events.

This freedom to launch and evolve custom-fit network slices rapidly – with lower capital and operating costs – will provide huge opportunities for telcos as they create increasingly sophisticated and lucrative digital services.

Telcos in pole position to take advantage

While we’re still scratching the surface of what 5G can deliver, it’s safe to say that telcos occupy one of the strongest market positions when it comes to exploiting this new network’s vast potential. Nearly every vertical imaginable relies on communications services to not only operate on a daily basis, but also accelerate innovation.

One such example is in the highly-competitive live-game streaming world, where pioneering platform Twitch boasts 3.3 million unique broadcasters per month and a staggering 560 billion minutes watched in 2018. There’s real potential here for providers to adopt greater integration into an ecosystem, with specific slices and integration into customer experience (CX) and applications meaning a specialised version of a game streaming platform could be offered under a telco’s very own brand.

In this scenario, telcos would provide much of the experience, including the basic portals for users and game providers, as well as own-branded monetisation for the latter. The service would operate from multiple cloud environments, with third parties supplying various aspects of the streaming platform, back office, CX, slicing, and edge. The mobile network operator would provide the access and other technologies.

This is just one of the many exciting opportunities for telcos to personalise network ‘slices’ to match the specific requirements of industry-vertical applications with customer segments. All service environments worth their salt will, at the very least, provide the basic ‘5G building blocks’ to help service providers move forward with both traditional mobile and enterprise services.

But the ultimate goal for telcos should be to add value to core services with good margins and operational efficiencies—something that will come with more automation in Cloud native technology and business practices, and with a willingness to explore outside comfort zones to tap into and capitalise on the expertise of people outside the industry. In other words, telcos must focus on creating exceptional experiences for their customers. 5G – along with network slicing – has the potential to make this a reality.

John LennsJohn Lenns, VP Product Management, Oracle Communications As VP of Product Management at Oracle Communications, John is responsible for leading product management, product marketing, business development and strategy teams that help telecoms companies develop and manage all aspects of their 4G and 5G networks, business operations and customer relationships. John joined Oracle Communications as part of the acquisition of Tekelec in 2013, having spent 15 years leading product, technical and business development teams for the company. Today, John is focused on helping telecoms companies make the most of the cloud to deliver 5G networks successfully and securely.

Oracle reports flat growth as cloud segment booms

As a late-comer to the increasingly profitable cloud segment, Oracle has yet to make more than a minor dent, and this quarter appears to be another demonstration of mediocrity.

The company stopped reporting its cloud business revenues as a standalone during last year, so it is difficult to give a complete picture, though total revenues tell a part of the story. Total Revenues were $9.6 billion, down 1% year-on-year, though once constant currencies are applied the boost was 3%. Combined with a outlook which promises a range of 0% growth to negative 2% (1% to 3% growth in constant currency), its not necessarily the prettiest of pictures.

This is not to say Oracle is in a terrible position, the company is still profitable, and the growth prospects of the cloud segment encourage optimism, but it is not capturing the fortunes of its competitors.

Despite the heritage and continued influence of this business, perhaps we should not be surprised Oracle is not tearing up trees today. Back in 2008, CTO and founder Larry Ellison described the technology industry as the only segment “which is more fashion driven than women’s fashion”, suggesting cloud was nothing more than a passing fad.

Hindsight is always 20/20, but after this condemning statement about the embryonic cloud industry you can see why Oracle is reporting average numbers while others are hoovering up the cloud cash. Despite this late start, in 2016 Oracle felt it had caught up, with Ellison declaring “Amazon’s lead is over” during an earnings call.

While executives can make all the claims they like, reeling off various customer wins and pointing towards heritage in the technology industry, the numbers speak for themselves. Oracle is not profiting from the cloud bonanza in the same way competitors are.

Alongside the effectively flat revenue growth, Non-GAAP net income in Q3 was down 8% to $3.2 billion, while the merged cloud revenues and license support unit grew, it was only by roughly 1.1%. When you consider AWS, Google, IBM, Microsoft and Alibaba are all quoted numbers which are notably higher than this, it does paint a relatively gloomy picture.

Recent data from Synergy suggests revenues for 2018 passed the $250 billion across seven key cloud services and infrastructure market segments, operator and vendor revenues, representing a 32% increase year-on-year. Oracle will of course not be applicable for all of these segments however the overarching cloud trends are incredibly positive.

That said, perhaps the most damning piece of evidence is these numbers met analyst expectations. The team should be applauded for this fact however, it does suggest the analyst community no-longer consider Oracle a front-runner in the technology world. If the estimates are mediocre when the ingredients for success are so abundant, it doesn’t make for the most positive perception of one of yesteryears heavyweights.

Telcos don’t understand the hacking community – Oracle

Security is a challenge for the industry, we all know that, but the speed in which security threats are evolving is creating new headaches every single day for the telcos.

Speaking to Travis Russell, Oracle’s Director for Cybersecurity, at Mobile World Congress, the issue for the telcos is a relatively simple one to identify, but heartachingly difficult to address.

“Risk management and tolerance is the Achilles Heel for telcos,” said Russell. “The telcos are always looking for a smoking gun before changing risk tolerance.”

This has been the issue in recent years, though it is only today the real damage is being dealt. In by-gone years, telcos have been unwilling to address the problem of security until it has become a direct threat to the business. Due to finite resources and increasing pressure on the spreadsheets, telco have had to focus on immediate problems instead of getting ahead of greater threats.

“IP was an enabler to vulnerabilities,” said Russell. “It took a while for the hackers to catch-up, but now they have.”

As Russell points out, prior to IP being introduced to the world of telcos, risks were much smaller. TDM technologies were incredibly secure, but as networks evolved, new problems emerged. These challenges are persistent today, but the main issue is few people understand the community which is the most dangerous threat.

A lazy stereotype of a hacker would be a 17-year computer whizz, sitting in his pants at his laptop with red bull scattered throughout the room, causing chaos on the digital highways in search of kudos on the dark web. This might have been true one-upon-a-time, but the threat has evolved.

Hackers nowadays can herald from the worlds of organized crime. These are not thugs who extort the local corner shop anymore, but nefarious organizations which use the virtual world as a means to make money illegally. Few people think of organized crime mobs or terrorists groups as containing PHD computer genius’, but this is increasingly becoming the new norm as undesirables poke and prod networks for illicit gains.

However, as Russell mentioned before, the challenge has not been adequately addressed because the smoking gun has not been found. Few people consider a data breach as major news anymore, but that is because there have not been enough reported instances of identity fraud as a result of personal information hitting the dark corners of the web. Another example of a new threat is Metro Bank’s recent incident in the UK.

Here, Metro Bank was the victim of SS7 attacks, which allowed anyone with access to reroute text messages and calls. Considering banks use SMS during the two-stage authentication process, this presents a massive risk for many companies in the future. They are becoming much more common.

Elsewhere, the risks are becoming much more sophisticated as well, with open source communities coming under threat. Russell notes that while ecosystems like Linux might be safe, there are plenty of eye balls on code to ensure its legitimacy, lesser known or more niche ecosystems could be at risk. In these cases, vulnerabilities could be placed into the source code before being used elsewhere. It is a risk few consider and demonstrates the sophistication and intelligence of those who are aiming to do harm.

While this might sound like scaremongering, it is a perfectly legitimate point to make. Due to the fact companies have been brushing aside security concerns for years, there is a lot of catching up to do. Governments need to force security ownership on all segments of the community, as well as do more do educate the consumer on the risk of digital society.

The fact of the matter is, each element of the supply chain has to take ownership for security, even if there are elements which are slightly outside of their control. As it stands, each layer, whether they be connectivity providers, operating systems, hardware manufacturers, software providers or the consumer, has to take a more pragmatic approach to security. The security conundrum can only be solved if each element takes a more serious approach, to create an end-to-end landscape of protection. Gone are the days responsibilities can be passed elsewhere.

The hackers have got a head-start, but with new fines enforceable on incidents and substandard security protocols, security might be taken seriously before too long.

The cloud is booming but no-one seems to have told Oracle

Revenues in the cloud computing world are growing fast with no end in sight just yet, but Oracle can’t seem to cash in on the bonanza.

This week brought joint-CEOs Safra Catz and Mark Hurd in front of analysts and investors to tell everyone nothing has really changed. Every cloud business seems to be hoovering up the fortunes brought with the digital era, demonstrating strong year-on-year growth, but Oracle only managed to bag a 2% increase, 1% for the cloud business units.

It doesn’t matter how you phrase it, what creative accounting processes you use, when you fix the currency exchange, Oracle is missing out on the cash grab.

Total Revenues were unchanged at $9.6 billion and up 2% in constant currency compared to the same three months of 2017, Cloud Services and License Support plus Cloud License and On-Premise License revenues were up 1% to $7.9 billion. Cloud Services and License Support revenues were $6.6 billion, while Cloud License and On-Premise License revenues were $1.2 billion. Cloud now accounts for nearly 70% of the total company revenues and most of it is recurring revenues.

Some might point to the evident growth. More money than last year is of course better, but you have to compare the fortunes of Oracle to those who are also trying to capture the cash.

First, let’s look at the cloud market on the whole. Microsoft commercial cloud services have an annual run rate of $21.2 billion, AWS stands at $20.4 billion, IBM $10.3 billion, Google cloud platform at $4 billion and Alibaba at $2.2 billion. Oracle’s annual run rate is larger than Google and Alibaba, those these two businesses are growing very quickly.

Using the Right Scale State of the Cloud report, enterprises running Google public cloud applications are now 19%, IBM’s applications are 15%, Microsoft at 58% and AWS at 68%. Alibaba is very low, though considering the scale potential it has in China, there is great opportunity for a catapult into the international markets. Oracle’s applications are only running in 10% of enterprise organizations who responded to the research.

Looking at the market share gains for last quarter, AWS is unsurprisingly sitting at the top of the pile collecting 34% over the last three months, Microsoft was in second with around 15%, while Google, IBM and Alibaba exceeded the rest of the market as well. Oracle sits in the group of ten providers which collectively accounted for 15% of cloud spending in the last quarter. These numbers shouldn’t be viewed as the most attractive.

Oracle is not a company which is going to disappear from the technology landscape, it is too important a service provider to numerous businesses around the world. However, a once dominant and influential brand is losing its position. Oracle didn’t react quick enough to the cloud euphoria and it’s looking like its being punished for it now.

Privacy International lines up US firms for GDPR breaches

UK data protection and privacy advocacy group Privacy International has submitted complaints to European watchdogs suggesting GDPR violations at several US firms including Oracle, Equifax and Experian.

The complaints have been submitted to regulators in the UK, Ireland and France, bringing the data broker activities of Oracle and Acxiom into question, as well as ad-tech companies Criteo, Quantcast and Tapad, and credit referencing agencies Equifax and Experian. The complaints are specifically focused on the depth of personal data processing, which Privacy International believes violates Articles five and six of the General Data Protection Regulation (GDPR).

“It’s been more than five months since the EU’s General Data Protection Regulation (GDPR) came into effect,” a Privacy International statement read. “Fundamentally, the GDPR strengthens rights of individuals with regard to the protection of their data, imposes more stringent obligations on those processing personal data, and provides for stronger regulatory enforcement powers – in theory. In practice, the real test for GDPR will be in its enforcement.

“Nowhere is this more evident than for data broker and ad-tech industries that are premised on exploiting people’s data. Despite exploiting the data of millions of people, are on the whole non-consumer facing and therefore rarely have their practices challenged.”

The GDPR Articles in question relate to the collection and processing of information. Article Five dictates a company has to be completely transparent in how it collects and processes information, but also the reasons for doing so. Reasonable steps must be taken to ensure data is erased once the purpose has been fulfilled, this is known as data minimisation. Article Six states a company must seek consent from the individual to collect and process information for an explicit purpose; broad brush collection, storage and continued exploitation of data is being tackled here.

In both articles, the objective is to ensure companies are being specific in their collection of personal information, and that it is utilised in a timely manner before being deleted once it has served its purpose. These are two of the articles which will hit the data-sharing economy the hardest, and it will be interesting to see how stringently GDPR will be enforced if there is any evidence of wrong-doing.

This is where Privacy International is finding issue with the firms. The advocacy group is challenging the business practises on the principles of transparency, fairness, lawfulness, purpose limitation,

data minimisation, accuracy and integrity and confidentiality. It is also requesting further investigations into Articles 13 and 14 (the right to information), Article 15 (the right of access), Article 22 (automated decision making and profiling), Article 25 (data protection and by design and default) and Article 35 (data protection impact assessments).

While GDPR sounds very scary, the reality is no-one has been punished to the full extent of the regulation yet. This might be because every company has taken the guidance on effectively and is operating entirely within the legal parameters, though we doubt this is the case. It is probably a case of no-one being caught yet.

The threat of a €20 million fine, or one which is up to 3% of a business’ total revenues, is nothing more than a piece of paper at the moment. If there is no evidence or fear authorities will punish to the full extent of the law, GDPR doesn’t act as much of a protection mechanism or a deterrent. When a genuine violation of GDPR is uncovered, Europe needs to bear its teeth and demonstrate there will be no breathing room.

This has been the problem for years in the technology industry; fines have been dished out, though there has been no material impact on the business. The staggering growth of revenues in the industry has far exceeded the ability of regulators to act as judge and executioner. Take the recent fines for Apple and Samsung over planned obsolescence in Italy. The $10 million and $5 million fines for Apple and Samsung would have taken 20 and 16 minutes respectively to pay off. This is not good enough.

Regulators now have the authority to hold the suspect characters in the industry accountable for nefarious actions concerning data protection and privacy, but it has to prove itself capable of wielding the axe. Until Europe shows it has a menacing side, nothing will change for the better.

Oracle has a crack at ending the idea of employees

Oracle is making all the right noises ahead of Mobile World Congress with an aggressive expansion in data centre assets, a virtual assistant and a broader offering across its autonomous product portfolio.

In October the team launched what it claimed was the world’s first autonomous database cloud and today’s announcement spreads the AI features to the rest of the Oracle world. The cloud database, naughtily known as 18c, was claimed to eliminate the human labour associated with tuning, patching, updating and maintaining the database, and now the team are taking these capabilities to the rest of developer cloud platform.

“The future of tomorrow’s successful enterprise IT organization is in full end-to-end automation,” said Oracle President of Product Development Thomas Kurian. “At Oracle, we are making this a reality. We are weaving autonomous capabilities into the fabric of our cloud to help customers safeguard their systems, drive innovation faster, and deliver the ultimate competitive advantage with smarter real-time decisions.”

While most companies will preach about the importance of their employees they are in fact the biggest burden on the spreadsheets. Humans make errors, need rest, get ill and cost a lot of money, Oracle is offering a solution to executives who want to be more profitable; use our products and get rid of some of your employees. And while this might sound very doom and gloom, it should come as very little surprise.

Technology is all about efficiency, productivity and performance; the promise is to enhance these metrics in your organization. Efficiency means spending less, productivity means doing more, or having a smaller number of people do a greater share of the jobs and performance means doing better. Automated cloud ensures that you tick all three boxes. Jobs are done quicker, less people are paid to do them and generally they are done better. Efficiency, productivity and performance gains mean less people involved.

Examples of the new automated products include automated application development (artifact discovery, dependency management, and policy-based dependency updates), self-learning chatbots, self-defining application and data integration for business process management tools, automated data discovery, preparation and analysis, user and entity behaviour analytics to automatically isolate and eliminate threats to the organization. It certainly is quite a comprehensive list.

To top it all off, Oracle has also introduced a digital assistant to converse across the user’s CRM, ERP, HCM, custom applications and business intelligence data. The assistant is also laden with machine learning algorithms to correlate data and automate user behaviour. It’s automation at its finest and scariest. What’s the point in having a workforce when Oracle’s software can do it all for you.

To complete the announcement, Oracle has also announced that it will be expanding its data centre footprint quite dramatically. 12 new data centre regions will be available across the world offering the full suite of Oracle software.

“The future of IT is autonomous. With our expanded, modern data centres, Oracle is uniquely suited to deliver the most autonomous technologies in the world,” said Oracle CEO Mark Hurd. “As we invest, our margins will continue to expand. And with our global data centre expansion, we are able to help customers lower IT costs, mitigate risks and compete like they never have before.”

In Asia the new assets will be in China, India, Japan, Saudi Arabia, Singapore, and South Korea, and Amsterdam and Switzerland in Europe. Two new regions will be opened in Canada and two new US locations will be added to support US Department of Defence workloads.

How telcos are revitalising their business with improved customer experience

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece John Lenns, Vice President, Policy Products at Oracle Communications, celebrates the improving fortunes of some operators and looks at what might be behind it.

The European telecoms sector is undergoing a resurgence. French telco Orange has recorded its best quarter of growth in a decade while Spain’s Telefónica recently upgraded its revenue projections for 2017.

This marks a turning point for an industry that has struggled in recent years with falling revenues per user and price-sensitive consumers that are more prone to switching providers and less inclined to believe there is much to differentiate between competing when it comes to service. Indeed, a survey from Oracle Communications found that the only thing stopping 39 per cent of consumers from switching is that they believe competing Communications Service Providers (CSPs) will offer equally poor levels of service.

Success in today’s market hinges on a company’s ability to deliver a high quality personalised service, but achieving this and overcoming consumer apathy is no small task, particularly as over-the-top apps and software developers grow their market share and set new standards for digital customer experience. However, the investment is starting to pay off for CSPs such as Orange and Telefónica.

As Orange CEO Stéphane Richard commented after the company’s Q2 earnings announcement, “[Our] strategy… which centred on giving customers an unbeatable experience through convergence around the home and a quality network, is now yielding results”.

Getting more out of customer data

At the core of more personalised services is a better understanding of customers and the data they generate. For instance, Telefónica is using big data to better understand the usage patterns of its television audiences, which in turn allows it to offer people tailored recommendations based on their history, the context they are watching in, and even the time of day.

Telefónica’s deep customer understanding is also invaluable to advertisers and media distributors, who are intent on tailoring content to their audiences. By sharing anonymised “television intelligence” with content providers, Telefonica has found a way to further monetise its network while also winning over customers with a more relevant service.

Moving towards a virtual network

Keeping up with changing customer habits and technological change is a top priority that requires CSPs to quickly develop and roll out new services. This in turn demands new ways of working, which is why Network Function Virtualisation (NFV) and cloud-based systems continue to gain momentum among leading telcos.

Recent research from Oracle found that of CSPs that have already begun their shift to virtualised networks, 60 per cent expect this will help them improve their customer experience with new digital services. Seventy-one per cent believe a communications cloud will allow them to simplify their operations so they can achieve roll these services out more quickly and efficiently.

The transition to virtualised networks and the cloud is not a question of “if” but “when”. Those providers which have embraced change are not only seeing benefits in the way they work today but also gaining a significant head start in the eyes of customers.

Building a strong foundation

Even as CSPs look to strengthen their market position through new data-driven services, they cannot afford to forget the basics of great customer experience, which is where many disruptive competitors are raising the industry standard with simple and effective interfaces.

Customers value reliability above all else. Just as network coverage and consistent call quality were top priorities for mobile users in the pre-smartphone era, people now expect dependability from their data network. Without this, the “wow” factor of any new service is lost. After all, what good is a high definition media streaming app if videos hang and buffer, or a GPS app that cannot accurately pinpoint their location outside the city limits?

Simplicity and convenience are also crucial. People today have little patience for lengthy interactions with a service agent to manage even simple requests. To that end, Telefónica consolidated its customer databases onto a single system, reducing query times by 80% and improving self-service options for customer queries such as checking usage and billing.

The principles of customer service have not changed, but the channels, format and speed of change in the industry are virtually unrecognisable from just 10 years ago. This shift has come quickly and brought with it a host of new challenges, but CSPs are showing they can keep pace. By focussing on the foundations of excellent customer experience and capitalising on new technologies to deliver and build upon these, telcos can prove a positive start to 2017 is only the beginning of their resurgence.

 

John Lenns OracleJohn Lenns is Vice President of Policy Products at Oracle Communications. He is responsible for driving the evolution of Oracle Communications Network Signaling and Policy Management Products from traditional 3GPP use cases towards new use cases including IoT, 5G, Enterprise and Cloud to Ground Markets.